Embracer Group to close multiple studios, and cancel several unannounced projects

Embracer Group, the Swedish parent company of many major developers and publishers such as Crystal Dynamics and Plaion, has announced that it will be restructuring following a "challenging year" and the cancellation of a $2 billion partnership.

The details:

• In a new open letter, Embracer CEO Lars Wingefors announced the restructuring program, revealing that it will be carried out in stages with the goal of completion by March 2024. The program is centered on "cost savings, capital allocation, efficiency, and consolidation," with the ultimate goal of transforming the company into a "highly cash-flow-generative business.”
• The restructuring will result in a revamped investment review process, including the approval of game projects, with some unannounced projects being canned if it is anticipated that they will not be "worth it" to continue development. It will also cut back on third-party publishing to focus on internally developed IPs and increase "external funding of large-budget games." Any projects that Embracer has already announced will continue as usual.
• Along with the cancellations, Wingefors confirmed that several studios would close to reduce operating and overhead costs even further, though he did not provide any details. Of course, the closure of studios will result in more job cuts, and Embracer's CEO stated that the company will "work to ensure that affected team members receive information first" and will try to provide opportunities elsewhere in the company to those affected wherever possible. Despite the planned layoffs in some areas, he stated that the company would keep hiring in others.
• Embracer's net sales for the previous fiscal year totaled approximately $3.5 billion, representing a 121% increase over the previous year. Wingefors, on the other hand, referred to the period as a "challenging year" in the financial report due to several delays, lower demand for titles, and a "lackluster reception for certain notable releases." The company's plans to secure a $2 billion partnership also fell through, causing the company to revise its forecasts and lower its financial expectations across the board.

More gaming business news:

• Spending on video game subscriptions has stalled, increasing by only 2% in April 2023 compared to the same period in 2022, according to Circana analysts. Even though subscription services like Game Pass are becoming more common, it appears that companies are struggling to attract new subscribers "beyond the console ownership base.”
• The Federal Trade Commission (FTC) has filed a request for a "temporary restraining order" to prevent Microsoft from finalizing its deal with Activision Blizzard. The FTC claims that Microsoft and Activision Blizzard have not "provided assurances" that they will not continue to push for the deal's closure despite the FTC's December 2022 lawsuit.